Shh can you keep a secret? Most people cannot. What if the success of your business depends on a 3rd party and you need them to keep quiet about what is discussed? This is when you need to have either a lot of trust or you have them sign a non-disclosure agreement. This guide will discuss what a NDA is and how to create one.
A Non Disclosure Agreement or NDA is a contract through which the parties agree to not disclose information covered by the agreement. An NDA creates a confidential relationship between the parties, typically to protect any type of confidential and proprietary information or trade secrets. As such, an NDA protects non-public business information. Also known as a Confidentiality Contract, Confidentiality Agreement, or Gag Order.
WHY do I need a Non-Disclosure Agreement NDA?
Some of the typical needs for an NDA include:
- Entering into a business relationship – If you have created a product or service and are looking to sell it to another business, you may need an NDA while you are negotiating the deal.
- Getting feedback – After developing a product or service, you may wish to run beta testing (trial) and gather feedback from your network or those in your industry.
- Bring on a new employee – It’s a good idea to have employees sign a document that they will not share company confidential information such as plans, business models, financial or products.
- Pitching to investors – If your business is looking for investment, you will likely reveal confidential business information when pitching your company. Always insist as they could steal your idea.
- Asking a competitor to help you on a project and stop them from stealing your designs and ideas and pitching independently.
WHAT would I use an NDA for?
An NDA will cover:
- A description of the confidential information;
- Confidential rights and obligations of the parties;
- Protection of sensitive information;
- Return of confidential information at the end of the agreement;
- Obligations regarding the proper use of the information; and
- Circumstances where disclosure is permitted.
An NDA normally protects ideas, products, app functionality, designs, source code, plans, business models, records, recipes, and any other commercially sensitive documentation.
HOW do I get an NDA created?
An NDA is a legal document but is only as good as the contents. You can get an NDA as
- A free template
- A purchased template
- Written by a lawyer as fit for purpose
Prices increase as you go down the list as does its ability to possibly be successful if you go to court.
HINTS
Once you have an NDA template chance are you will be able to use it again for similar circumstances.
You should consider:
- How long you want it to last
- Is it mutual or one way (both parties or only one)
- Having a specific definition (broad will result in ambiguity)
- Will a court consider it reasonable
- Implications if someone will not sign
- What other steps you need to take to protect your secrets, for example, lock them in a safe
- Locations it applies to, including overseas
- All details are correct
SUMMARY – Protect Confidential Information
An NDA will help you protect the information you want to share with 3rd parties. Templates to create one can be easily obtained but the use of a lawyer will increase your protection.
PLEASE NOTE: All information provided on this website is general in nature and may not be appropriate to your individual circumstances. It does not replace advice available from experts such as lawyers, accountants, business advisors, brokers, etc. We further recommend when using these experts you ensure they have the appropriate licenses and endorsements.